Understanding Construction Financing Mortgages in Canada: A Comprehensive Guide

Understanding Construction Financing Mortgages in Canada: A Comprehensive Guide

Construction financing mortgages are an essential tool for homeowners and investors looking to build new homes or renovate existing ones. In Canada, construction financing mortgages are becoming increasingly popular, allowing individuals to build their dream homes or develop real estate projects. In this blog, we will provide a comprehensive guide to construction financing mortgages in Canada, covering everything from eligibility criteria to the application process. 

1.What is a Construction Financing Mortgage?  

  • A construction financing mortgage is a type of mortgage that provides financing for the construction or renovation of a property. This type of mortgage is typically used by individuals or investors who are building a new home or developing a real estate project. 

2.Eligibility Criteria 

  • Credit Score: Applicants for construction financing mortgages must have a good credit score to qualify for the mortgage.  
  • Income: Lenders will assess the income and employment status of applicants to ensure they have the financial capacity to repay the loan.  
  • Down Payment: Applicants must be able to provide a significant down payment, typically ranging from 20-25% of the total project cost.  
  • Property Appraisal: Lenders will require a property appraisal to ensure the value of the property being built or renovated is adequate to secure the loan. 

3.Benefits  

  • Customization: Construction financing mortgages allow homeowners to build their dream homes or investors to develop real estate projects according to their specifications.  
  • Competitive Interest Rates: Construction financing mortgages typically have competitive interest rates, making them an attractive option for borrowers.  
  • Control: With construction financing mortgages, borrowers have greater control over the project and can ensure that it is built according to their standards and vision. 

4.How to Apply for a Construction Financing Mortgage 

  • Determine Project Budget: Before applying for a construction financing mortgage, it’s important to determine the total project cost and budget accordingly.  
  • Find a Lender: Research and compare lenders offering construction financing mortgages to find the best terms and rates for your circumstances.  
  • Gather Required Documents: To apply for a construction financing mortgage, you will need to provide proof of income, employment status, down payment, and property appraisal.  
  • Get Pre-Approved: Pre-approval for a construction financing mortgage can give you a better idea of how much you can afford and what your interest rate and monthly payments will be. 
  • Finalize the Application: Once you’ve found a suitable lender and property, you can finalize your construction financing mortgage application with the lender. 

5.Tips for Success 

  • Plan Ahead: Careful planning and budgeting can help ensure the success of your construction project and reduce the risk of cost overruns or delays.  
  • Work with Professionals: Seek the guidance of professionals such as architects, builders, and lawyers to ensure that your project is built to code and meets all legal requirements. 
  • Communicate with Your Lender: Keep your lender informed of any changes or issues that may arise during the construction process to avoid any misunderstandings or delays. 
  • Monitor Progress: Regularly monitor the progress of your construction project to ensure it is being built to your specifications and within budget. 

Contact Capital Mortgages today to learn more about refinancing and how we can help you save money on your mortgage. Our team of experienced mortgage professionals is here to help you navigate the process and to find the mortgage solution that best meets your needs. Whether you are looking to lower your monthly payments, pay off your mortgage faster, or access equity in your home, we can help you explore your options and find the best mortgage solution for your unique situation. So, if you are thinking about refinancing your mortgage in Canada, don’t hesitate to contact us today! 

We here at Capital Mortgages in Ottawa look forward to assisting you with all your Ottawa mortgage needs. Contact us today by calling us at: 613-228-3888 or email us direct at: info@capitalmortgages.com

You can use these links to APPLY NOW or CONTACT US.

You can also click here.

The Pros and Cons of Refinancing Your Mortgage

The Pros and Cons of Refinancing Your Mortgage

Refinancing your mortgage can be a great way to save money on your monthly payments, pay off your mortgage faster, or access equity in your home. However, refinancing is not always the right choice for every borrower, and it’s important to carefully consider the pros and cons of refinancing before making a decision. 

Pros of Refinancing Your Mortgage

Here are some of the pros of refinancing your mortgage: 

1.Lower interest rate

One of the biggest advantages of refinancing your mortgage is the potential to lower your interest rate. By securing a lower interest rate, you can save money on your monthly mortgage payments and pay off your mortgage faster. A lower interest rate can also result in significant savings over the life of your mortgage. 

2.Shorter mortgage term

Another advantage of refinancing is the ability to switch to a shorter mortgage term. By opting for a shorter mortgage term, you can pay off your mortgage faster and save money on interest charges. However, it’s important to keep in mind that a shorter mortgage term may also result in higher monthly payments. 

3.Access equity in your home

Refinancing can also allow you to access equity in your home. If your home has appreciated in value since you first took out your mortgage, you may be able to refinance for a higher loan amount and use the extra funds for home renovations, debt consolidation, or other expenses. 

4.Change mortgage type

Refinancing can also give you the opportunity to change the type of mortgage you have. For example, you may be able to switch from a variable-rate mortgage to a fixed-rate mortgage, or vice versa. It’s important to carefully consider the pros and cons of different mortgage types before making a decision. 

Cons Refinancing Your Mortgage

Now, let’s take a look at some of the cons of refinancing your mortgage: 

1.Closing costs

One of the biggest drawbacks of refinancing is the cost. Refinancing typically involves paying closing costs, such as legal fees and land transfer taxes, which can add up to thousands of dollars. It’s important to carefully consider whether the savings from refinancing will outweigh the costs of closing. 

2.Longer break-even point

Another disadvantage of refinancing is the longer break-even point. The break-even point is the point at which the savings from refinancing outweigh the costs of closing. It can take several years for the savings from refinancing to offset the costs, so it’s important to carefully consider whether you will be in your home long enough to benefit from the refinance. 

3.Prepayment penalty

Some mortgages come with a prepayment penalty, which means that you will have to pay a fee if you pay off your mortgage early. If you are considering refinancing, it’s important to check whether your mortgage has a prepayment penalty and to factor this into your decision. 

4.Impact on credit score

Refinancing can also have an impact on your credit score. Applying for a new mortgage involves a credit check, which can temporarily lower your credit score. It’s important to understand how refinancing will affect your credit score and to take steps to maintain a strong credit score. 

Is Refinancing Your Mortgage the Right Choice?

In order to determine whether refinancing is the right choice for you, it’s important to carefully consider your financial situation and long-term goals. Here are a few questions to consider when deciding whether to refinance your mortgage: 

1.How long do you plan to stay in your home?

If you don’t plan on staying in your home for a long period of time, refinancing may not be the best choice. It can take several years for the savings from refinancing to offset the closing costs, so it’s important to ensure that you will be in your home long enough to benefit from the refinance. 

2.How much will you save with a lower interest rate?

A lower interest rate is one of the biggest advantages of refinancing, but it’s important to carefully consider how much you will save with a lower rate. Calculate the difference between your current interest rate and the new rate you are considering, and determine whether the savings will be significant enough to justify the closing costs. 

3.What are the terms of your current mortgage?

Before you consider refinancing, it’s important to understand the terms of your current mortgage. This includes the interest rate, mortgage term, and any prepayment penalties or fees. Understanding the terms of your current mortgage will help you determine whether refinancing is a good financial decision. 

4.What are the fees and closing costs associated with refinancing?

Refinancing can be costly, with closing costs and other fees adding up to thousands of dollars. It’s important to understand the fees and closing costs associated with refinancing and to determine whether the savings from refinancing will outweigh the costs. 

5.Do you have the financial resources to refinance?

Refinancing can be a financial commitment, and it’s important to have the financial resources to cover the closing costs and any other fees associated with the refinance. Consider factors such as your income, debts, and monthly expenses when determining whether you have the financial resources to refinance. 

6.Do you have a solid credit score?

A good credit score is important when it comes to securing a lower interest rate on your mortgage. If you have a strong credit score, you may be more likely to qualify for a lower rate and to save money on your mortgage through refinancing. If you have a lower credit score, it may be more difficult to qualify for a lower rate, and refinancing may not be as financially beneficial. 

 Conclusion

In conclusion, refinancing your mortgage can be a great way to save money on your monthly payments, pay off your mortgage faster, or access equity in your home. However, it’s important to carefully consider the pros and cons of refinancing before making a decision. Some things to consider include your long-term plans for your home, the potential savings with a lower interest rate, the terms of your current mortgage, the fees and closing costs associated with refinancing, your financial resources, and your credit score. 

If you are considering refinancing, it’s a good idea to consult with a mortgage broker or financial advisor to discuss your options and to determine whether refinancing is the right choice for you. A mortgage broker can help you compare rates and terms from different lenders, and can assist you in finding the mortgage solution that best meets your needs. They can also provide you with expert advice and guidance to help you make informed decisions. 

Contact Us Today

Contact Capital Mortgages today to learn more about refinancing and how we can help you save money on your mortgage. Our team of experienced mortgage professionals is here to help you navigate the process and to find the mortgage solution that best meets your needs. Whether you are looking to lower your monthly payments, pay off your mortgage faster, or access equity in your home, we can help you explore your options and find the best mortgage solution for your unique situation. So, if you are thinking about refinancing your mortgage in Canada, don’t hesitate to contact us today! 

 

We here at Capital Mortgages in Ottawa look forward to assisting you with all your Ottawa mortgage needs. Contact us today by calling us at: 613-228-3888 or email us direct at: info@capitalmortgages.com

You can use these links to APPLY NOW or CONTACT US.

You can also click here.

How to Improve Your Credit Score for a Better Mortgage Rate

If you are planning on applying for a mortgage, one of the most important factors that lenders will consider is your credit score. Your credit score is a numerical representation of your creditworthiness, and it is used by lenders to determine your risk as a borrower. A higher credit score can lead to a lower interest rate on your mortgage, while a lower credit score can result in a higher interest rate or even a denial of your mortgage application. If you are looking to improve your credit score in order to qualify for a better mortgage rate, here are five tips to help you get started:

1. Check your credit report and score

The first step in improving your credit score is to check your credit report and score. You can get a free copy of your credit report from each of the three major credit bureaus (Equifax, TransUnion, and Experian) once a year by visiting annualcreditreport.com. In addition, there are also various websites and apps that can provide you with a free credit score. By checking your credit report and score, you can identify any errors or mistakes that may be negatively impacting your credit score and take steps to correct them.

2. Use credit responsibly

Building a good credit score takes time, so it’s important to use credit responsibly from the start. This means only borrowing what you can afford to pay back, paying your bills on time, and not maxing out your credit cards. By using credit responsibly, you can establish a good credit history and improve your credit score over time.

3. Pay your bills on time

Payment history is one of the most important factors that contributes to your credit score. By paying your bills on time, you can demonstrate to lenders that you are responsible and reliable when it comes to paying your debts. Set up automatic payments or reminders to ensure that you don’t miss any due dates.

4. Reduce your credit card balances

Credit utilization is another important factor that affects your credit score. This is the ratio of your credit card balances to your credit limits. A higher credit utilization ratio can indicate to lenders that you are using a large percentage of your available credit, which can be seen as a risk. To improve your credit utilization ratio, try to pay down your credit card balances as much as possible and aim to keep your balances below 30% of your credit limits.

5. Don’t close old credit cards

If you have credit cards that you no longer use, it may be tempting to close them in order to simplify your finances. However, closing an old credit card can actually have a negative impact on your credit score. This is because the credit card’s age is a factor in your credit score, and a longer credit history can help improve your score. Instead of closing old credit cards, consider keeping them open and using them sparingly to maintain a good credit history.

6. Dispute errors on your credit report:

If you find errors on your credit report, it’s important to take action to correct them as soon as possible. Credit report errors can occur for a variety of reasons, and they can have a significant impact on your credit score. By disputing errors on your credit report, you can help ensure that your credit score reflects your true creditworthiness.

7. Monitor your credit regularly

It’s important to monitor your credit regularly to ensure that your credit score is accurate and up-to-date. In addition to checking your credit report and score once a year, you can also consider signing up for a credit

monitoring service or setting up alerts to notify you of any changes to your credit. By monitoring your credit regularly, you can stay on top of any potential issues or mistakes and take action to correct them.

8. Don’t apply for too many credit cards at once

Every time you apply for a credit card, it results in a hard inquiry on your credit report, which can temporarily lower your credit score. To avoid too many hard inquiries, try to limit your credit card applications to only when you really need them.

9. Consider a secured credit card

If you have a low credit score or a limited credit history, a secured credit card may be a good option. A secured credit card is a type of credit card that requires a deposit as collateral, which is used to secure the credit line. By using a secured credit card responsibly and paying your bills on time, you can build or improve your credit score.

In conclusion, improving your credit score can be a key factor in getting approved for a mortgage and securing a better interest rate. By checking your credit report and score, paying your bills on time, reducing your credit card balances, avoiding too many credit card applications, and considering a secured credit card, you can take steps to improve your credit score and increase your chances of getting approved for a mortgage.

If you are considering a mortgage and are looking for guidance and support in improving your credit score, contact Capital Mortgages today! Our team of experienced mortgage brokers can help you understand your credit score and provide you with tips and strategies for improving it. Don’t miss out on the opportunity to qualify for a better mortgage rate and achieve your dream of homeownership. Contact Capital Mortgages today and let us help you get started on the path to home ownership.

 

We here at Capital Mortgages in Ottawa look forward to assisting you with all your Ottawa mortgage needs. Contact us today by calling us at: 613-228-3888 or email us direct at: info@capitalmortgages.com

You can use these links to APPLY NOW or CONTACT US.

You can also click here.

Should You Renovate or Relocate Your Home

Should You Renovate or Relocate Your Home? What To Consider Before Making a Decision!

Do you feel like your house has lost its charm and looks old and outdated? If so, it’s time to consider either renovating your home or finding a new place to live. Both of these options can be overwhelming and require significant time, effort and money. However, with the right planning and advice, you can make the right choice for you and your family. Here are some things to think about when deciding whether to renovate or relocate your home:

Decide what you want to change about your home

If you’re planning on renovating your home, start by deciding what you want to change. Are you looking to add more space to your home? Do you want to change the layout? Do you want to add a new bathroom or kitchen? How much you’re able to change your home will depend on the type of renovation you’re doing. For example, if you’re looking to build a new addition to your home, you’ll be able to do whatever you want with the design and layout. However, if you’re looking to remodel your kitchen, you’ll have a lot less freedom. You’ll need to work within the existing layout of your home and the types of materials used in the construction.

Consider how much you’re willing to spend

As with any major project, you’ll need to consider how much it’ll cost. You’ll need to factor in costs like the price of materials and contractors’ rates. You’ll also need to consider the cost of moving if you’re looking to relocate. Where you live will also have an impact on how much it’ll cost to renovate or relocate your home. For example, it will cost significantly more to renovate or relocate in a major city than it will in a small town. Whatever you decide to do, it’s important to have a realistic budget in mind so you don’t end up spending more than you can afford.

Think about where you’d like to live instead

Before you consider renovating or relocating your home, you should think about where you’d like to live instead. You need to consider factors like the quality of the neighborhood, your commute to work and the local school system. It’s important to find a place that is right for your family. If you’re planning on relocating, you’ll need to do some research to find places that might be right for you.

Find out how much renovating will cost

There are many factors that will impact the cost of renovating your home. Some of these include the type of renovation you’re doing, the materials you’re using and whether you need to hire contractors. If you’re doing a small renovation like adding a new bathroom or updating the kitchen, you could do it yourself or hire a contractor for a fairly reasonable price. However, if you’re doing a major renovation like adding a new floor or building an addition, it’s going to cost a lot more.

Discover the pros and cons of relocating

If you’re considering relocating, you should first explore the pros and cons of this decision. Some of the pros of relocating include:

– You’ll have more choice as to where you live: If you’re looking to relocate, you’ll have a lot more choice as to where you’d like to live.

– You may be able to find a larger home at a lower cost: If you’re looking to relocate, you’ll likely be able to find a larger home at a lower cost than if you’re renovating.

– You can avoid the hassle of a major renovation: If you’re planning to move, you won’t have to deal with the hassle of a major renovation.

The Bottom Line

When deciding whether to renovate or relocate your home, it’s important to consider all of your options. This will help you make the best decision for you and your family. Remember, it’s important to consider factors like the cost of renovations and the cost of moving as well.

We here at Capital Mortgages in Ottawa look forward to assisting you with all your Ottawa mortgage refinancing needs. Contact us today by calling us at: 613-228-3888 or email us direct at: info@capitalmortgages.com

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What is a Home Equity Line of Credit (HELOC)?

Did you know you can easily finance purchases related to home ownership (i.e., renovations or home repairs) by using your home as a borrowing tool?

 

A Home Equity Line of Credit (HELOC) is a loan secured against the equity of your home. Because you’re using your home as collateral, this often means a lower interest rate on your loan. Additionally, borrowing to improve a home may result in increased home value.

 

How does a HELOC work?

 

Home equity is the difference between the value of a home and the unpaid balance of its mortgage. This value increases over time as a homeowner pays off a mortgage and the value of a home increases. HELOC loans can be distributed for up to 65% of a home’s appraised value, and can be combined with a regular mortgage for a maximum of 80% of a home’s appraised value.

 

A HELOC is set up as a line of credit with a set maximum draw, rather than a fixed dollar amount. Once a HELOC is negotiated, you can borrow up to your limit at any time. Much like a mortgage or credit card payment, you make minimum monthly payments on the borrowed balance. You would have a draw period during which you can use your line of credit, and a repayment period during which is must be repaid.

 

How is interest calculated?

 

HELOC interest is often calculated on a daily basis, since balances may change at any time depending on draws and payments. Your rate of interest is divided by 365, and then multiplied by the average daily balance during the month. For instance, a 28-day month may mean less interest than a 31-day month.

 

Are you interested in funding a temporary home project or other expense by using the equity in your home? To see if a HELOC would be suitable for your needs, contact Capital Mortgages today!

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3 Steps to Take Before Applying for a Mortgage

Do you think it’s time to contact your local mortgage broker for a new home purchase or a refinance on your current home? Here are three things to consider before filling out the loan application.

1. How is your credit?

Your credit score will impact your ability to get a loan more than anything else. The higher your score, the better interest rate and terms you can get on the loan. The best thing to do is to view your credit report from the three credit reporting agencies, Transunion, Equifax, and Experian. You can do this once a year for no charge. Once you have the reports, you should look them over carefully to make sure all the information is correct. Once you’ve verified that everything is accurate, you will then need to look at your overall score. If your scores are anywhere above 580, you should be able to get a loan. Ideally, you want to be above 700, but there are programs that work with credit scores lower than that.

2. Pay down your debt as low as possible

There are two main reasons to focus on paying off your debt before applying for a new loan.

If you have any bad debt or are behind on any payments, your credit score will be lower. If you can pay off debts that show up on your credit report, you will see your score go up. Also, if you have a high debt to credit ratio, your credit score will be lower as well. A high debt to credit ratio means that you have used up most of your available credit limit. For example, let’s say you have a credit card with a $5,000 limit and you owe $4,500 on it. You will show up as a higher credit risk because you’ve almost tapped out your limit. On the other hand, if you only owe $500 on the card you will show up as a lower risk, and your score will be higher.

The other reason to pay off debts is that it will increase how much you can borrow on your home loan. Your mortgage broker will look at your debt to income ratio which is how much you owe on debt every month in comparison to your income every month. The more cash flow you have in your budget, the higher your mortgage payment can be. The higher the mortgage payment, the nicer house you will be able to afford.

3. Fix up your home

If you are not looking to buy a new home but only wanting to refinance your current home you not only need to do the first two items on this list, you also need to make sure your house is spruced up and looking nice. The refinance is based on a home appraiser giving value to your home. The more repairs that are needed, the lower the value the appraiser will give your home. You want the home to appraise as high as possible to get the best loan options. If you have at least 20% equity in your home, you will have the best rates, and you won’t have to pay extra mortgage insurance.
Your mortgage is usually your largest monthly expense, taking these steps will help ensure that you get the best deal possible with the lowest out of pocket expenses. If you are unsure, feel free to give Capital Mortgages a call, and one of our Mortgage Professionals will be happy to answer any of your questions.

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7 Ways to Get Your Car Ready for Winter Weather

Get Your Car Ready for Winter Weather

Whether you are ready for it or not, the winter season is knocking and if you want your car giving you full service then preparing it for cold weather is an MUST-DO. In cases of nasty weather, especially the winter, proper preparation will guarantee your safety.

With proper preparation to your vehicle, you are sure to avoid being stranded when snowstorms or unexpected cold snaps come your way. Herein are seven distinct ways you can prepare your car for winter weather:

# 1 WINTER TIRES
Do not let the name fool you; these tires do not just come in handy on snow conditions alone. If you are looking for tires that will guarantee you good road grip and a smooth driving experience, then winter tires are what you need to have during the winter period.

Their soft rubber component facilitates good grip on icy or cold pavements, and they guarantee better results on temperature drops even to below 7C than all-season tires. Moreover, they can prevent sliding since their aggressive tread characteristic allows them to effectively channel away snow and slush.

# 2 BATTERY
In comparison to summer conditions, cold weather poses difficulties when starting the battery and one that has given you service for quite a period may not be fully efficient during the winter conditions.

You can take it to a service technician who will check it for any corrosion around the terminals and ensure that the cables are in good operational condition and are also well attached. Nonetheless, it is still proper to replace it before ensure you avoid getting stranded later.

# 3 OIL CHANGE
To prevent wear and damage, oil needs to smoothly flow through the vehicle’s engine. Nonetheless, not all car-oils are suited for winter conditions and those that do not have a tendency of thickening in the cold. For such conditions, ensure you have replaced your vehicle-oil with one that is characterized by low-viscosity which will quickly flow and safeguard your engine.

Moreover, low-viscosity can economize your fuel since it reduces friction. Adhering to recommended Oil changing times will guarantee a clean and durable engine.

# 4 WIPER BLADES
Clear vision when driving particularly into winter sunshine glare is one thing every driver requires but with streaks on the windshield, the driving experience can turn chaotic. Get wiper blade replacement any time they are not fully effective such as when they fail to clear the glass when they get torn or crack or even when they chatter or bump.

Exposure to sun and weather eventually hardens them, and it is only sensible to replace them at least twice on a yearly basis. For SUVs and hatchbacks, do not forget to replace the rear wipers also.

# 5 WINTER WASHER FLUID:
In winter conditions, using plain water will give you problems since it freezes. Nonetheless, with a winter-specific fluid particularly designed to resist freezing and wash away winter grime like road salt ensures a smooth running. Ensure that you also have a spare incase the fixed one depletes.

# 6 COOLANT
Cold temperatures may pose problems to your coolant, and as such it is essential, you ensure it can properly operate in winter conditions. Moreover, adhere to the maintenance schedule of your car so that you flush the cooling system and fill it up with new fluid when required.

The fact that the coolant gradually deteriorates means that at some point it can fail to protect both the cooling system and your engine. Ensure that your cooling system is well-adapted for winter conditions.

# 7 EMERGENCY KIT
In a bad snowstorm help may not come immediately, and as such it is appropriate to ensure that your emergency kit is in proper condition and is well stocked. Among the essential items that should be in the kit are blankets, matches, candles, folding towels and energy snacks.

Renew your Mortgage with Ottawa Mortgage Broker: Capital Mortgages

Debt In the Event of Death

Once death strikes you, you will have no other option other than to leave behind your family, incurred debts and your legacy to the bereaved. Whatever happens to the debts once you’re no longer remains a question in the minds of many. In general, all your acquired assets and debts will be part of the estate whereby now the estate will take responsibility of paying them. The money that remains is channeled to your heirs. In the case there is not sufficient money to repay back debts, they will remain unpaid.

It tends to be somehow technical, but with some fix, the family members will be able to maneuver on such technicalities. Here are a few things that you need to have at the back of your mind:

SETTLING THE ESTATE

A will draft by the deceased typically mentions an executor, who will stand responsible for the settlement of his related financial affairs. In case there is no written will, then someone will need to apply to the relevant court to be appointed the Estate Trustee. There is a pecking order that should be paid first. It is stated that secured debts like auto loans or mortgage ought to be considered first, and thereafter to be followed by unsecured debts, such as credit medical bills and credit card.

HOME

Banks expect payments for a mortgage because they will take action by giving penalties. There is assured protections to family members or other individuals living within the home. Financial institutions are prohibited from automatically foreclosing whenever a home owner meet his/her untimely death.

AUTO

Similar protection is assured to automobiles that go unpaid in full amount. However, lenders are not allowed to take back a car as long as it is being paid for. Rules differ from one area to another in the way in which assets are protected and which are not. So it will be wise enough to consult a lawyer.

CREDIT CARDS

If you claim the credit card alone, then you should also be ready to claim the debt even in death. In that case, therefore, the estate will take care of it. If it is a joint account or there is a co-signer, there is the likelihood of the other party being held responsible for the balance as well. But if you’re just an authorized user, you’re likely not to pay.

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How To Dig Out Of The Bankruptcy Hole

Many find it difficult to obtain approval for a mortgage when bankrupt, but there are options available to overcome the challenge. A successful result is dependent on patience as time is required to create a renewed financial reputation and work through the bankruptcy regulations. Learning how to dig out of the bankruptcy hole can help you achieve financial freedom and home ownership.

Get into a Savings Habit

Consult with a legal representative to determine the best bankruptcy options for your specific case needs. Upon discharge, work towards building a savings plan by putting away an amount that you can afford on a weekly or monthly basis. The purpose is to raise funds that can be used as a down payment for the future purchase of property.

Work on Credit

Consider application for a secured credit card that is a bank credit card where the funds are deposited before it can be spent. This eliminates the risk of accumulating debts with a conventional credit card but provides a benefit of showing as a regular credit card on a credit report. Once a six month period has passed, one may apply for a conventional credit card for financial reports.

Purchase RRSPs

The option to buy RRSPs can prove most beneficial for the first time homeowner. This includes a withdrawal of up to $20 000 that can be used as a home down payment. Additional savings can be achieved as an RRSP generates a larger tax refund that can be added to the deposit.

Remain Objective and Realistic

Bankruptcy may be one of the hardest processes one has to work through. Remaining disciplined can achieve financial freedom more efficiently. Staying within affordable parameters in the search of a house proves responsible.

Consult with the Professionals

Contacting professionals like a Capital Mortgage Broker can aid in determining qualifications for a loan after bankruptcy. The average period of filing as bankrupt and working through the legal and regulatory process is two years. Individuals will have to provide proof of a year of established credit to apply for a mortgage.

Obtain Sound Advice

Filing as bankrupt can prove time-consuming and requires a degree of modesty to reach financial success. The aftermath of the recession has left a large number of Canadians having to face financial uncertainty and unforeseen challenges. We can provide comprehensive, honest and sound advice for borrowers who are struggling to establish their credit and work towards a favorable result in the pursuit of purchasing a home.

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How To Read Your Credit Report

If you want to be creditworthy and stay that way, you need to monitor your credit history. To simplify the process here is important info on how to read your credit report.

You should monitor credit reports twice a year, for best results. This will help minimize errors and fraudulent activities. You may obtain reports from Transunion, Experian, and Equifax. These are the three major reporting agencies, and they will give you a good idea of overall creditworthiness.

Remember these reports may not all be the same so you’ll need to read them carefully. However, you should be familiar with specific terms to understand better the information in the reports. These are some terms you need to be familiar with:

* Creditor – the company you got the loan or credit card with.

* Account numbers – you may not be able to see complete account numbers on the reports. In fact, many may show just the last four digits. This is an important security feature which helps to keep personal information from being intercepted.

* Reported – the date the bureau received the info from the creditor.

* Last active – this date reflects the last time you made any payments or purchases on the account. This is usually the same as the “reported” date. However, it will also show when you closed an account and if it was reactivated.

* Opened – the date you opened up the account or took out the loan.

* Limit/highest credit – limit is the total amount a loan cannot exceed without penalties. Highest credit denotes the most you owed at one time.

* Past due amount – this shows if you currently are behind in payments, and by how much.

* Payment/Terms amount – tells what your monthly payments are and the length of the loan. For example, you might have a car loan payment of $350 for 5 years.

* No. Of months revolving – reports how long since you first opened the account. Also, denotes late payments and how late they were made (30, 60, 90 days).

At the end of the report, you may see important info like bankruptcies, liens, and foreclosures. It may also mention how many times reports were requested by you and if you have aliases.

Your credit report should also include creditor and reporting agency contact info at the end of the document. If you notice any errors, you have a right to contact the agency to have them corrected and to dispute inaccurate information.

Renew your Mortgage with Ottawa Mortgage Broker: Capital Mortgages

These Numbers Are The Key To Understanding Your Finances

If you are interested in improving your financial well-being, it can be as easy as understanding some basic numbers. In fact, just a few sets of numbers are the key to understanding your finances today and in the future. Let’s take a closer look those numbers.

1. Net Worth

It’s simple to determine net worth. All you need to do is subtract debt from assets. For instance:

Assets

* Autos* Home* Home furnishings* Personal belongings* Savings account* Checking account* Investments (stocks, bonds, etc.)

Debts (Liabilities)

* Car loans* Home mortgage* Credit card debt* Student loans* Balance of any loans that remains unpaid

Once you discover net worth, it might be a negative number, and this is not good. To improve net worth you have two basic options:

* Increase assets* Lessen debts

2. Equity in the Home

Equity is one of the most important assets you can have. To determine equity, subtract the home’s current value (including appreciation and home improvements) from the mortgage balance. Here is an example. You owe $68,000 on a home and today it would sell for $145,000 (present market value). Subtract 68K from 145K and you get 77K. The home’s equity is an asset of $77,000. In some cases, you could have an “underwater mortgage” and this means you owe more than the property is worth.

To improve home equity, try these strategies:

* Upgrade the kitchen* Upgrade the bathrooms* Do your own improvement work to help increase greatly a home’s value.

3. Gross Earnings

If you receive a regular paycheck, gross income is the amount you’re paid before all payroll deductions. This is the number you must enter on your income tax forms each year. It is not the number to use when you make out a household budget. Instead, you will need to use another number.

4. Take Home Pay

This is also called net income and is the amount you end up with each payday. This is the amount you have to pay bills and all other expenses, and the figure you need for determining the household budget.

5. Monthly Expenses

Everything you must pay out each month is your total monthly expenses. It includes food, utilities, clothes, transportation, housing, and entertainment. This number is so important because you have direct control over personal spending, and it’s a good place to start when it comes to improving your financial picture.

6. Rate of Inflation

Inflation rates today have a huge effect on the future. You need to account for this number when you figure out a plan for the future and retirement. Remember, as inflation goes up, buying power goes down. The average inflation rate has been about three percent annually, but this can vary all the way from ten percent to almost zero.

When you plan for retirement, be sure to include an estimate of inflation over a period of years. Perhaps the best strategy is to overestimate, to ensure you’ll have enough for those golden years.

 

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Learn About Mortgage Penalties 6 Questions That Will Help You Avoid Them

The last thing you want to think about is any penalty you face if you have to break your mortgage. As many as seven out of ten borrowers with a 5-year fixed-rate loan find it necessary to make adjustments. Some people have to find a larger house while others face financial difficulties that force them to refinance. Regardless of the reason, a large number of homeowners might need to break their mortgage and may need to pay large financial penalties. If you are worried about mortgage penalties here are 6 questions that will help you avoid them and will give you something to consider.

In the financial world, this type of penalty is known as an Interest Rate Differential, or IRD. The penalty represents the amount borrowers are responsible for if they want to adjust their mortgages. Financial institutions used to intentionally make it difficult for borrowers to calculate penalties and many consumers were overwhelmed with the staggering cost. Regulations now require lenders to explain all penalty charges clearly in language that anyone can understand. They also have to post online tools that make it easy for users to calculate their penalties.

Despite improvements in the system, borrows may still have their costs affected by hidden factors. One example is if you received a discount when the lender approved the loan. The online calculator does not figure in the discount and its impact on your penalty. Here are some questions about penalties you should discuss with your Capital Mortgage broker.

Is my penalty based on discounted rates, bond yields or posted rates? Without this information, you have no idea what the bank bases your penalty on and will have no way to determine the cost.

If you remain my lender after I break the mortgage, are there any benefits for me. Will I be eligible for a penalty discount? Many financial institutions offer incentives to retain borrowers.

Do you use a nearest term or shorter-term rate to calculate the penalty’s comparison rate? A higher comparison rate will mean a lower IRD. Timing may also affect the penalty amount.

Is there a penalty for increasing my mortgage payment? You may want to pay off the debt sooner or make upgrades.

If I pay the penalty, is there an opt-out provision? Some borrowers are unable to opt out unless they sell the home.

How long are penalty quotes valid? This is good information to know if interest rates are decreasing.

Many people are interested in adjusting a mortgage. Contact our team at Capital Mortgages with any questions you have about this topic.

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Why Young People Should Start Building Their Credit Profile

Having a good credit rating has always been important, but in current times it is more important than ever. This is why young people should start building their credit profile now. Young people want to have fun and live a worry free life, but building a good credit score now, and keeping it high will pay great dividends in the future. Let us look at some of the reasons young people, and all people for that matter, must have a high credit score.

The first reason is that you will be able to borrow money when you need it at a lower interest rate. In the past everyone paid basically the same interest rate no matter what their credit score. If you qualified for the loan, you paid the same interest rate as anyone else. Today, lending institutions charge higher interest rates to those with a low credit score. Having a high credit score will save you from paying a lot of money in interest. This is especially important when you make large purchases such as cars or homes. Since it takes time to build a good credit score you must start working on your score while you are young.

The next reason young people need to start building their credit profile now is work. This is something many people do not even think about. If you have a low credit score you could be passed over for a job or a promotion. Employers now take credit ratings into account when they hire an applicant or when they give promotions. Many people do not believe that this is necessarily fair, they believe that just because they have poor credit does not make them a poor employee. This could be true, but in the modern world it is a fact of getting a job that many employers use credit ratings in their decision making process.

Later in life, if you want to make large purchases such as sports cars, boats, or homes you must have a good credit score. For instance, to qualify for a home loan you must have a credit score of at least 600, as of today. With a score of 600 you will get the loan, but you will pay the highest interest. The same rule applies to purchasing anything with credit. For these reasons young people need to start building their credit profile as soon as they turn 18 and can have their own credit card.
Many people believe that building a good credit score is difficult. In actuality it is not hard at all, you just need to use some restraint and common sense when using credit. The easiest way to build your credit score fast is to get one credit card when you turn 18. Use the card for all of your daily living expenses, making sure you do not spend more than you make, then at the end of the month pay the full balance due. This way you are building your credit rating and yet not paying any interest. Check your credit score at least once a year, and if you use restraint, common sense, and your credit card you will see your credit score rising rapidly.

 

Buying a New Home: Capital Mortgages Ottawa

10 Tips on Fixing Bad Credit

Most of the people in Canada find themselves victims of bad credit where they are affected negatively. They
find themselves victims of the bad credit ratings for the reasons beyond their capabilities. Some may be ill; they
may have lost a job while others find themselves in this situation by not understanding the consumer credit.
When a bad financial situation happens to good people, bankruptcy sometimes is the only way out. That should not be
considered as the end of everything as there are some strategies that can assist you get your credit back on
track and you can be entitled again to mortgage even after bankruptcy. It will be very frustrating to move from
one financial institution to the other only to be declined. Here are the 10 strategies you should consider so as to
get your credit back:

1.Locate The Right Lender

There are some lenders who will not approve the mortgage the moment they will realize that a bad credit
appears in your credit report. This implies that you have to select the right lender who will decide whether to
approve or not based on your current financial position not the bankruptcy you had. Such lenders will approve
the moment they will realize that you are capable of paying back.

2.Consider The Length Of Time Since Your Bankruptcy Discharge

The different lenders have different criteria on this. Most of them will consider those with two years after
bankruptcy with a proof of being re established after the bad credit. There are some who can lend even those
with recent bankruptcy but you should seek advises from a mortgage expert like the team at Capital Mortgages so as to guide you on those types of
lenders.

3.Consider Your Reasons For Being Bankrupt

If the reasons were beyond your control, then most of the lenders will approve the mortgage as it is not your
fault. If the reasons are as a result of poor management, excessive debts and many other reasons that can be
controlled, then it will affect the lender’s approval.

4.Consider The Size Of Your Down Payments

With your past bankruptcy, most of the lenders will consider at least 10% down payments including your own
funds that are not borrowed or given as gifts. In some cases, down payments of 5% or less may be allowed.

5.The Type Of Property

Some of the lenders will consider row townhouses or just houses. Very few lenders do consider apartments or
the stacked townhouses which may involve the stringent basis to qualify.

6.The Credit Report

This is meant to show your financial health based on your past behaviors. This will guide the lender on how
capable you are to repay. You can obtain a copy of your credit report from Trans Union (1-800-663-9980) or
Equifax (1-800-465-7166).

7.Your Credit Score

This is meant to reveal your credit worthiness. It is a summary that will translate your personal information from
the credit report and any other relevant sources into a 3 digit number that will represent the overall credit
worthiness. The borrower’s credit score will determine the rates of the mortgage. The higher the credit score,
the better the rates. Besides, there are those lenders who will set the minimum credit score requirements for
those borrowers with bankruptcy.

8.The Rate Considerations

Those borrowers with bankruptcy will have a higher rate than those with clean records. Besides a lender may
charge a lower rate if some basic lending criteria are met such as two years since bankruptcy, healthy beacon
score, a perfect debt servicing ratios and long term history of job stability.

9.The Re-establishment Credit

This is meant to inform the lender that you have been managing very well since bankruptcy. it will include the
payments of the recent on time loans on the banks if any. It is very important to know that any default will be
included in the credit report for the next six years and this could be the ground for the lenders to decline your
application.

10.Seek Advice From A Licensed Mortgage Broker

A licensed Capital Mortgages agent will guide you on the basic steps to rebuild your credit score.  Our mortgage brokers will also give you the tips on how to get a mortgage even with recent bad credit.

At Capital Mortgages in Ottawa we strive to be your personal mortgage broker for life.

Solutions for getting through tough financial times

Economic stresses can happen to the most careful individuals. You may think
you are prepared by planning, budgeting and saving, but unexpected issues can
arise for various reasons. Identifying areas where you are the most vulnerable
and making contingency plans is one aspect of the solution, but sometimes
these efforts are inadequate. You need to know what to do if there is a loss of
employment, health issues or a divorce. Here are some solutions for getting
through tough financial times.

Even before you try to find solutions, you must have the knowledge about what
your economic picture is under normal times and whether or not you are over-
extended in the event of a fiscal emergency. Good record-keeping is always a
smart approach to financial issues. If you can avoid the tough times, it is better
than finding a solution after the fact. However, here are some pointers for when
you have financial problems on the horizon.

Ask for help as early in the process as possible. Don’t let yourself be stopped
by embarrassment or nervousness about approaching your mortgage company
or insurer. Delay can affect your credit rating and can cause negative balances
to grow quickly. Mortgage lenders understand that helping the borrower to get
through the stressful situation is preferable to having a defaulted property on
their books.

When you reach out to the lender, be sure you have the entire picture of your
financial situation. You should be prepared to explain what event(s) have created
the crisis. Have a detailed budget that shows your income and expenses,
assets and a current credit report. If you have alternative income sources, they
can be important. You should also explore any insurance coverage that might be
available on credit cards or mortgages.

Bring any documentation that applies to your situation. You might have a letter of
dismissal, insurance policies, fees on the property or documentation about your
home ownership. Save time by having these available for the lender or insurer.

Be brave about asking questions. You may not know all the options available to
you, but you can ask questions of the lender or insurer. You can ask for solutions
such as deferring payments, capitalization of past due amounts or increasing
the mortgage amortization term. There are many ideas which may apply in your
particular situation. Finding the best solutions for getting through tough financial
times will require some determination on your part.